"At the meeting we're having today, I will be advocating an intensification of economic sanctions on Iran, particularly to increase the isolation of the Iranian financial sector and to intensify sanctions," the foreign secretary explained on the Today programme.

"These are not measures that are in reaction to our embassy. There has been a range of other reactions to that.

"Our long-term concern is, of course, the nuclear programme, the danger that poses to the peace of the Middle East and the wider world, the threat of proliferation spreading to other countries in the region.

"It is for that reason we will agree, I hope, today to intensify European sanctions on Iran."

Britain has a history of antagonism with Iran which in recent years has seen locally engaged staff "bullied and harassed by the Iranian authorities," Mr Hague explained.

He said the UK's ambassador was "greeted with a Molotov cocktail over the wall" when he arrived to take up his post in October.

Yesterday he had told the Commons that there was "absolutely no excuse" for the failure of Iran's police to protect diplomatic staff and premises, however.

Around 200 demonstrators, mostly from a student Basji militia organisation, overran the British compound in Tehran on Tuesday afternoon. They vandalised and looted the homes of staff and the ambassador's residence.

Britain's response was to inform the Iranian charge d'affaires that all Iranian diplomatic staff would have to leave the country within 48 hours.

"This does not amount to the severing of diplomatic relations in their entirety," Mr Hague assured MPs.

"It is action that reduces our relations with Iran to the lowest level consistent with the maintenance of diplomatic relations."

An Iranian government spokesperson responded to the news by attacking Britain's "blatantly aggressive" attitude to Iran over the last three or four decades.

Despite the setback to relations between the two countries, it is concerns over the Iranian nuclear programme which are of primary concern to European foreign ministers meeting in Brussels today.

They have been informed by the International Atomic Energy Agency that Iran has carried out tests linked to the development of a nuclear device.